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Invenergy president: US gas projects a 'bridge' for company

Despite a recent return to its roots as a gas-plant builder, Invenergy’s long-term focus remains heavily on renewables, says president and chief operating officer James Murphy.

Chicago-based Invenergy is one of North America’s most important developers and operators of large-scale renewables plants, and has been since the advent of the modern American renewables market. Lately, however, gas has featured prominently on the privately held company’s agenda, with its 1,480MW Lackawanna gas plant under construction in Pennsylvania and another 1GW project advancing in Rhode Island.

Both projects are located in the US northeast, a region that faces the combination of high electricity prices, lots of retiring conventional generation capacity, and limited room for onshore renewables.

“The gas-fired opportunities are very much a rifle shot – there are not going to be too many of them,” Murphy tells Recharge. “It’s an opportunistic business, but you add up a lot of megawatts very quickly in that business compared to renewables.”

Still, Murphy says, “renewables are our number one area”. Invenergy is a top-five owner of US wind capacity, a sizeable player in solar, and an early leader in grid-scale storage.

“We’ve always viewed the gas business as a bridge,” he says. “We continue to see renewables as the future – we think that horse has left the barn and there’s no stopping it.”

“If you fast forward to the 2020s, notwithstanding the phase-out of the tax credits, we think [the US renewables] market will be very vibrant, costs will keep coming down, and maybe there will be something else [to support growth] – a technology-neutral tax credit, a carbon tax.”

‘All about wind’ right now

Invenergy was founded in 2001 by Michael Polsky following his sale of gas generator SkyGen to Calpine Corp., today the largest US gas-fired generator. SkyGen was a pioneering independent power producer (IPP) in newly deregulated US electricity markets, and Invenergy has played a major role in helping to successfully translate the IPP model to renewables over the past decade.

In its early days Invenergy focused on developing gas plants. “We weren’t in the renewables business because there wasn’t a renewables business,” explains Murphy, who was chief financial officer at SkyGen before joining Invenergy.

By 2004, however, renewables had become the company’s predominate focus, and gas plants of Lackawanna’s scale have been a rarity for Invenergy in recent years as it consolidated its leadership in the US renewables market.

Lackawanna, due on line in 2018, will be one of the most efficient and lowest-emission gas plants ever built in the US, using GE’s latest gas turbine technology. Invenergy is also a major buyer of GE wind turbines.

Will Invenergy’s current gas projects be its last? “I wish I knew,” says Murphy, who adds that the biggest surprise for him in US power markets since the launch of Invenergy has been the fall of natural gas prices.

On the renewables side, Invenergy is “all about wind right now”, he says. “If you look at the levelised cost of wind right now, you’re looking at the low $30s unsubsidised in the windiest areas – it’s very compelling.”

“2018, 2019 and into early 2020 will be big delivery dates for us.”

Invenergy has also become a sizeable solar developer, but Murphy says the company sees less rationale for owning and operating solar plants, as it often does with wind farms.

“To own and operate – and to have to put tax equity on – a solar project, in the environment we’re in, is just not competitive,” he says. “The folks who can monetise the [solar investment tax credit] themselves have a clear advantage.”

One tiny but growing corner of the US renewables market in which Invenergy is not hatching any immediate plans is offshore wind.

Instead, the company has partnered with transmission developer Anbaric on its Clean Energy Link proposal, which would flow nearly 700MW of onshore wind and solar power from Invenergy projects across the East Coast onto New York’s crowded Long Island.

“There’s been a little bit of a breakthrough with Block Island, and there’s a lot of buzz right now about offshore, but the math still doesn’t add up – for us at least. We’re still not seeing the math add up in the way maybe it does in Europe."

Meanwhile, Murphy says, “we have plenty of opportunity in the US onshore market”.

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Invenergy president: US gas projects a 'bridge' for company

Despite a recent return to its roots as a gas-plant builder, Invenergy’s long-term focus remains heavily on renewables, says president and chief operating officer James Murphy.

Chicago-based Invenergy is one of North America’s most important developers and operators of large-scale renewables plants, and has been since the advent of the modern American renewables market. Lately, however, gas has featured prominently on the privately held company’s agenda, with its 1,480MW Lackawanna gas plant under construction in Pennsylvania and another 1GW project advancing in Rhode Island.

Both projects are located in the US northeast, a region that faces the combination of high electricity prices, lots of retiring conventional generation capacity, and limited room for onshore renewables.

“The gas-fired opportunities are very much a rifle shot – there are not going to be too many of them,” Murphy tells Recharge. “It’s an opportunistic business, but you add up a lot of megawatts very quickly in that business compared to renewables.”

Still, Murphy says, “renewables are our number one area”. Invenergy is a top-five owner of US wind capacity, a sizeable player in solar, and an early leader in grid-scale storage.

“We’ve always viewed the gas business as a bridge,” he says. “We continue to see renewables as the future – we think that horse has left the barn and there’s no stopping it.”

“If you fast forward to the 2020s, notwithstanding the phase-out of the tax credits, we think [the US renewables] market will be very vibrant, costs will keep coming down, and maybe there will be something else [to support growth] – a technology-neutral tax credit, a carbon tax.”

‘All about wind’ right now

Invenergy was founded in 2001 by Michael Polsky following his sale of gas generator SkyGen to Calpine Corp., today the largest US gas-fired generator. SkyGen was a pioneering independent power producer (IPP) in newly deregulated US electricity markets, and Invenergy has played a major role in helping to successfully translate the IPP model to renewables over the past decade.

In its early days Invenergy focused on developing gas plants. “We weren’t in the renewables business because there wasn’t a renewables business,” explains Murphy, who was chief financial officer at SkyGen before joining Invenergy.

By 2004, however, renewables had become the company’s predominate focus, and gas plants of Lackawanna’s scale have been a rarity for Invenergy in recent years as it consolidated its leadership in the US renewables market.

Lackawanna, due on line in 2018, will be one of the most efficient and lowest-emission gas plants ever built in the US, using GE’s latest gas turbine technology. Invenergy is also a major buyer of GE wind turbines.

Will Invenergy’s current gas projects be its last? “I wish I knew,” says Murphy, who adds that the biggest surprise for him in US power markets since the launch of Invenergy has been the fall of natural gas prices.

On the renewables side, Invenergy is “all about wind right now”, he says. “If you look at the levelised cost of wind right now, you’re looking at the low $30s unsubsidised in the windiest areas – it’s very compelling.”

“2018, 2019 and into early 2020 will be big delivery dates for us.”

Invenergy has also become a sizeable solar developer, but Murphy says the company sees less rationale for owning and operating solar plants, as it often does with wind farms.

“To own and operate – and to have to put tax equity on – a solar project, in the environment we’re in, is just not competitive,” he says. “The folks who can monetise the [solar investment tax credit] themselves have a clear advantage.”

One tiny but growing corner of the US renewables market in which Invenergy is not hatching any immediate plans is offshore wind.

Instead, the company has partnered with transmission developer Anbaric on its Clean Energy Link proposal, which would flow nearly 700MW of onshore wind and solar power from Invenergy projects across the East Coast onto New York’s crowded Long Island.

“There’s been a little bit of a breakthrough with Block Island, and there’s a lot of buzz right now about offshore, but the math still doesn’t add up – for us at least. We’re still not seeing the math add up in the way maybe it does in Europe."

Meanwhile, Murphy says, “we have plenty of opportunity in the US onshore market”.